EUR/USD technical analysis: Snaps four-day winning run, but bull breakout still valid

• EUR/USD’s four-day winning streak ended on Tuesday.
• The inverse head-and-shoulders breakout is still valid.
• The bullish case would weaken below 1.1344.

EUR/USD fell 0.28 percent on Tuesday, engulfing Monday’s high and low and ending the four-day winning streak.

The currency pair, however, defended the former resistance-turned-support of the 200-day moving average (MA), which was located at 1.1355 on Tuesday. Interestingly, the neckline of the inverse head-and-shoulders pattern breached was also seen at 1.1355 yesterday.

Put simply, the bullish outlook put forward by an upside break of the 200-day MA and the inverse head-and-shoulders breakout on Friday is still valid.  Supporting the bullish case is the fact that the 5-day moving average has crossed above the 200-day MA for the first time since May 2018.

The case for a rally to 1.16 would further strengthen if the pair bolsters the bullish setup with a close above Tuesday’s high of 1.1412.

The outlook, however, would turn bearish if the pair finds acceptance below 1.1344 – the low of Tuesday’s bearish outside day candle. As of writing, the pair is trading at 1.1361.

Daily chart

Trend: Bullish

Pivot points